Religare Enterprises Ltd, a public listed holding arm of the diversified financial services group, is raising Rs 550 crore (over $90 million) through a preferential allotment to an investment arm of Standard Chartered besides a company related to the Dhillon family.
Under the proposed fundraising, Religare Enterprises is issuing shares worth Rs 550 crore to Standard Chartered Bank (Mauritius) Ltd and Bestest Developers Private Limited, as per a stock market disclosure. The firm did not disclose the break-up of the money to be raised from the two.
Given the current market price, it could lead to around 10 per cent equity dilution.
Bestest Developers is a wholly owned subsidiary of privately held SGGD Projects Development Pvt Ltd (previously known as Mehta & Mehta Real Estate Pvt Ltd), which currently owns 2.7 per cent equity stake in Religare Enterprises. This stake was acquired last September through a deal worth around Rs 139 crore where the promoters sold their stake.
SGGD Projects in turn is controlled by Shabnam Dhillon, who is part of the Dhillon family. One of her two sons Gurpreet Singh Dhillon is CEO of Religare Health Trust, the Singapore-listed REIT housing a part of Fortis’ business. Shabnam Dhillon separately owns around 13 per cent of Religare Enterprises.
Dhillons are closely associated with Malvinder and Shivinder Singh, the billionaire brothers who are the promoters of Religare. However, they do not form part of the promoter group.
The proposed preferential allotment, which is subject to approval from shareholders, would also allow promoters to prune their holding.
The promoters held 60.71 per cent as on December 31, 2013 and after accounting for convertibles held by the public, they own around 55-56 per cent. The latest transaction will help them bring down the stake to around 50 per cent or less.
The promoters of Religare have been cutting their holding as part of their stake divestment to bring down their shareholding to 49 per cent to qualify Religare Enterprises as a non-operating financial holding company (NOFHC) as per RBI guidelines to apply for a banking licence.
According to the RBI guidelines, the applicant shall be eligible to set up a bank through a wholly owned NOFHC. The objective for the central bank is that the holding company should ring-fence the regulated financial services entities of a group, including the bank from other activities of the group. As per the guidelines on banking licences, the NOFHC needs to be held by promoters and the promoter group only through companies in which they hold not more than 49 per cent.
Singh brothers held over 71 per cent in Religare Enterprises as of June 30, 2013.
In September, they sold around 8 per cent stake in Religare Enterprises for an estimated Rs 421 crore. Part of this was lapped up by US-based Customers Bancorp which had previously committed $51 million into the public-listed company.
For Standard Chartered this would mark more exposure to the group. Last year, Standard Chartered Private Equity had put in around Rs 300 crore in total to buy shares of the group company Fortis Healthcare through a mix of foreign currency convertible bonds (FCCBs), open market purchases and participation in an institutional placement programme (IPP).
Mumbai-based Religare Enterprises operates as an integrated financial services company and through its subsidiaries has interests in brokerage, insurance, asset management, lending solutions, investment banking, wealth management and private equity.
(Edited by Joby Puthuparampil Johnson)
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